Miller v. American Airlines, Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________

No. 10-1784
____________

ROBERT T. MILLER,

Appellant

v.

AMERICAN AIRLINES, INC.;
AMERICAN AIRLINES, INC., Pilot Retirement
Benefit Program Fixed Income Plan (A Plan);
AMERICAN AIRLINES, INC.,
Pension Benefits Administration Committee
____________

On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. No. 2-08-cv-00277)
District Judge: Honorable A. Richard Caputo
____________

Argued November 16, 2010
Before: AMBRO, FISHER and WEIS, Circuit Judges.

(Filed: 1/25/2011 )
Katie R. Eyer [Argued]
Michael J. Salmanson
Salmanson Goldshaw
1500 John F. Kenndey Boulevard
Two Penn Center, Suite 1230
Philadelphia, PA 19102
Counsel for Appellant

Donald L. Havermann [Argued]
Morgan, Lewis & Bockius
1111 Pennsylvania Avenue, N.W.
Suite 800 North
Washington, DC 20004

Jonathan S. Krause
Michael J. Puma
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103
Counsel for Appellees

____________

OPINION OF THE COURT
____________

FISHER, Circuit Judge.

Robert T. Miller filed suit against American Airlines,
Inc., the American Airlines, Inc. Pilot Retirement Benefit

2
Program Fixed Income Plan, and the American Airlines, Inc.
Pension Benefits Administration Committee (collectively,
“American”), alleging a violation of § 502(a)(1)(B) of the
Employee Retirement Income Security Act of 1974 (ERISA),
29 U.S.C. § 1132(a)(1)(B). Miller asserted that American
impermissibly terminated his long-term disability benefits,
and informed him of this action in a vague and misleading
letter. He further alleged that American‟s review of his case
failed to consider all of his relevant diagnoses, as well as the
unique requirements of his employment as a pilot. The
District Court granted American‟s Motion for Summary
Judgment, ruling that American‟s termination decision was
proper. This appeal requires us to consider whether the
administrative process that American employed complied
with the procedural mandates of ERISA and, if not, whether
the proper remedy is a remand to the plan administrator or a
reinstatement of benefits. For the reasons stated herein, we
will reverse the decision of the District Court. We hold that
the termination of Miller‟s benefits was arbitrary and
capricious in light of the numerous substantive deficiencies
and procedural irregularities that pervaded American‟s
decision-making process. We further hold that Miller is
entitled to retroactive reinstatement of his disability benefits.

I.

A. Factual History

Miller was employed as a commercial airline pilot for
American Airlines for nearly ten years. In August 1998,

3
Miller suffered a psychotic episode while on duty and was
subsequently admitted to the hospital. He was prescribed
various medications as part of his treatment regimen.
Miller‟s FAA medical certification, required for all
commercial pilots, was revoked.

Miller applied for long-term disability (“LTD”)
benefits under the American Airlines, Inc. Pilot Retirement
Benefit Program Fixed Income Plan (the “Plan”), a defined
benefit plan subject to ERISA, 29 U.S.C. § 1001 et seq.
Miller began receiving treatment from a psychiatrist, Dr. Abel
Gonzalez, in September 1998. Dr. Gonzalez diagnosed
Miller as suffering from anxiety disorder and brief reactive
psychosis. On February 3, 1999, Dr. Gonzalez reported to
American that Miller had suffered brief reactive psychosis
caused by physical fatigue, sleep deprivation, and emotional
stress, and that his progress was “favorable.” Thereafter,
American awarded Miller LTD benefits in November 1999.

The Plan provides “own occupation” disability
benefits, where a pilot deemed disabled from employment as
a pilot for American may receive benefits even if he could
work in a different capacity. Under the Plan, “[d]isability
means an illness or injury verified through a qualified medical
authority . . . which prevents a Member from continuing to
act as an Active Pilot Employee in the Service of the
Employer.” (App. at 717.) In addition, an employee will no
longer be eligible for LTD benefits if, among other things,
“verification of such Disability can no longer be established.”
(Id. at 739.) The Plan vests discretionary authority with a

4
Pension Benefits Administration Committee (“PBAC”) that
has the power to determine benefits eligibility. Charlotte
Teklitz was the delegate of the PBAC who reviewed appeals
from the denial or termination of benefits.

In May 2003, American informed Miller that it could
no longer substantiate his disability and terminated his
benefits as a result. Dr. Gonzalez subsequently submitted
documentation reiterating that Miller had been diagnosed
with anxiety and brief reactive psychosis. Dr. Gonzalez noted
that Miller had taken medication until January 2000 and that
he had been “asymptomatic” since the spring of 2001. (Id. at
112.) He further noted that Miller would be able to return to
work once his FAA medicate certification was reinstated. In
June 2003, Dr. Gonzalez provided four progress notes at
American‟s request. His notes stated that Miller remained
asymptomatic, that he was not taking any medication, and
that pursuant to FAA regulations he was still not able to
work. After receiving this information, American determined
that Miller “[m]edically qualifies for [the] disability pension
program” and reinstated his LTD benefits. (Id. at 148.)

Over the next two years, American periodically
requested medical updates from Miller to document his
disability. In response, Dr. Gonzalez provided documentation
that Miller was still under his care, that he was seen monthly,
and that he was not taking any medication. American
subsequently noted that Miller was not expected to return to
work. In August 2005, Miller provided another letter from
Dr. Gonzalez reporting that Miller was asymptomatic, that he

5
required adequate sleep to prevent manifestations of stress,
and that he was not taking any medication. On October 16,
2006, Dr. Gonzalez provided four additional progress notes
stating that Miller‟s diagnosis was the same, that he was
doing well, that he was “in general asymptomatic with good
mental stability,” and that he was not taking any medication.
(Id. at 107.)

On October 23, 2006, American sent Miller a letter
notifying him that his LTD benefits were terminated. The
letter provided:

We are in receipt of your recent correspondence
from Dr. Abel Gonzalez, submitted in response
to our letter of September 21, 2006 from Jeanne
Spoon, RN. However, we are unable to verify
either the existence of a continuing medical
disability or your continued substantial progress
towards obtaining your FAA medical
certification.

(Id. at 98.) The letter then quoted the Plan and stated that a
pilot‟s disability will cease if “verification of such Disability
can no longer be established.” (Id.) The letter further
elaborated:

In order to receive further favorable
consideration, you will need to demonstrate that
you are actively pursuing obtaining your FAA
medical certification.

6
 At this time, however, verification of your
continued disability cannot be established and
your disability benefits under the Plan will end
immediately[.]

(Id.) Significantly, the Plan does not make eligibility for
LTD benefits contingent on a pilot‟s pursuing medical
certification with the FAA. Upon receiving this letter, Miller
contacted American and inquired as to why his benefits were
terminated. In response, American referred him to the
termination letter and did not provide any additional
information. Miller appealed the decision to the PBAC on
November 30, 2006. To support his claim, Miller included a
completed appeal form stating that he continued to have
active psychiatric diagnoses and submitted a letter from Dr.
Gonzalez.

In this letter, Dr. Gonzalez stated that Miller “has been
continually and [] permanently disabled from obtaining a
Class One Medical Certificate as required by F.A.A.
regulations since August of 1998.” (Id. at 340.) Dr.
Gonzalez further clarified that Miller “remains permanently
disabled due to medical reasons.” (Id.) According to Dr.
Gonzalez, Miller continued to suffer from anxiety and
psychosis, as he had since his original diagnosis. Dr.
Gonzalez then went on to summarize Miller‟s treatment:

The necessity for this continuated [sic]
treatment has and will continue to exist because
of the nature of his psychiatric conditions.

7
 More specifically, his diagnosis reveals and
refers to latent vulnerability on his mental status
so that prevention [sic] medical treatment, when
adequate, may be sufficient. However, no
medical treatment has the capacity to neither
revert, undo, nor cure such condition.

(Id.) Dr. Gonzalez concluded by noting that Miller continued
on active treatment necessary to preserve his health and that
his prognosis was fair.

In light of the disagreement as to Miller‟s eligibility
for LTD benefits, American referred the case to Western
Medical Evaluators (“WME”) for an outside medical review
on March 27, 2007.1 American directed WME to perform an
“evidence-based, forensic medical review/evaluation” of
Miller‟s case. (Id. at 300.) The letter from American stated
that Miller‟s “[c]onditions [c]laimed” were anxiety disorder
and brief reactive psychosis. (Id.) Additionally, American
prompted WME to answer six specific questions regarding
the evidentiary support for the “continuing presence of
[Miller‟s] psychiatric diagnoses.” (Id. at 301.)

1
The Plan dictates that disputes will be referred to a
clinical authority and that those findings “regarding the nature
and extent of such illness or injury shall be final and binding
upon the Administrator, the Association and the Member and
his Beneficiaries.” (App. at 785-86.)

8
 In response, Drs. Seskind and Crain of WME reviewed
Miller‟s file and provided American with a report on
April 20, 2007. Neither performed a physical evaluation of
Miller or communicated with him. Dr. Crain‟s report
reviewed the documents in Miller‟s file and found that the
records “did not document any psychiatric problems or
explain [Miller‟s] failure to obtain the required medical
certificate.” (Id. at 310.) As such, Dr. Crain determined that
Miller was not disabled. Dr. Seskind‟s portion of the report
noted that FAA standards require that a pilot not suffer from
psychosis. He then went on to say it was “crucial to note”
that Miller was not undergoing psychotherapy, that he was
not taking medication, and that he had not attempted to obtain
his FAA medical certification. (Id. at 312.) In light of the
fact that Miller had not requested a formal approval of his
psychiatric designation from an FAA medical examiner and
been denied this certification, Dr. Seskind found that Miller
“is therefore not really disabled.” (Id.) On May 22, 2007,
American sent Miller a letter which included the WME report
and reaffirmed the termination decision.

B. Procedural History

On February 13, 2008, Miller filed a complaint against
American in the United States District Court for the Middle
District of Pennsylvania alleging a claim for benefits pursuant
to ERISA § 502(a)(1)(B). Both parties filed cross-motions
for summary judgment. On November 30, 2009, the
Magistrate Judge issued a report and recommendation
proposing that that District Court grant Miller‟s motion for

9
summary judgment and order the retroactive reinstatement of
his benefits. Miller v. American Airlines, Inc., No. 08-CV-
277, 2009 WL 6039583, at *1 (M.D. Pa. Nov. 30, 2009).
According to the report, American‟s termination of Miller‟s
LTD benefits was arbitrary and capricious due to numerous
procedural errors on the part of American. See id.

On March 8, 2010, the District Court rejected the
Magistrate‟s report and granted summary judgment in favor
of American. Miller v. American Airlines, Inc., No. 08-CV-
277, 2010 WL 890016, at *11 (M.D. Pa. March 8, 2010).
The District Court determined that American‟s termination
decision was not arbitrary and capricious. See id. In its
ruling, the District Court concluded that American had
received new information from Dr. Gonzalez that Miller was
“asymptomatic,” and therefore properly concluded that he
was no longer disabled. See id. at *8. Additionally, the
District Court concluded that the termination letter
sufficiently described the reasons for discontinuing Miller‟s
LTD benefits. See id. at *9. Likewise, the District Court
determined that American did not impermissibly rely on
Miller‟s failure to obtain his FAA medical certification. See
id. Finally, the District Court found that American
adequately addressed Miller‟s diagnoses and job requirements
as set forth in the WME report. See id. at *10.

Miller filed a timely notice of appeal.

10
 II.

The District Court had jurisdiction under 29 U.S.C.
§ 1132(e)(1) and 28 U.S.C. § 1331. We have jurisdiction
pursuant to 28 U.S.C. § 1291. We exercise plenary review
over an order granting summary judgment. See Shook v.
Avaya, Inc., 625 F.3d 69, 72 (3d Cir. 2010). “In exercising
this review, „[w]e may affirm the order when the moving
party is entitled to judgment as a matter of law, with the facts
reviewed in the light most favorable to the non-moving
party.‟” Id. (quoting Kossler v. Crisanti, 564 F.3d 181, 186
(3d Cir. 2009)); Fed. R. Civ. P. 56(c). We review a challenge
by a participant to a termination of benefits under ERISA
§ 502(a)(1)(B) under an arbitrary and capricious standard
where, as here, the plan grants the administrator discretionary
authority to determine eligibility for benefits. See Metro. Life
Ins. Co. v. Glenn, 554 U.S. 105, 115-16 (2008); Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). An
administrator‟s decision is arbitrary and capricious “if it is
„without reason, unsupported by substantial evidence or
erroneous as a matter of law.‟” Abnathya v. Hoffman-La
Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993) (quotations and
citations omitted).2

2
In the ERISA context, the arbitrary and capricious
and abuse of discretion standards of review are essentially
identical. See Howley v. Mellon Fin. Corp., 625 F.3d 788,
793 n.6 (3d Cir. 2010).

11
 We review various procedural factors underlying the
administrator‟s decision-making process, as well as structural
concerns regarding how the particular ERISA plan was
funded, to determine if the conclusion was arbitrary and
capricious. 3 See, e.g., Glenn, 554 U.S. at 116-17; Estate of
3
In Firestone Tire & Rubber Co. v. Bruch, the
Supreme Court determined that when an ERISA plan grants
discretion to the administrator, whether the administrator
operates under a conflict of interest is a factor that must be
weighed in determining if there was an abuse of that
discretion. 489 U.S. 101, 115 (1989). After Firestone, our
Court employed a “sliding scale” standard of review where
the level of conflict would influence the intensity of arbitrary
and capricious review. See Post v. Hartford Ins. Co., 501
F.3d 154, 161 (3d Cir. 2007). The Supreme Court‟s
subsequent decision in Metropolitan Life Insurance Co. v.
Glenn, however, instructed that “Firestone means what the
word „factor‟ implies, namely, that when judges review the
lawfulness of benefit denials, they will often take account of
several different considerations of which a conflict of interest
is one.” 554 U.S. 105, 117 (2008).
As a result of Glenn, the “sliding scale” approach is no
longer valid. See Estate of Schwing v. The Lilly Health Plan,
562 F.3d 522, 525 (3d Cir. 2009). Instead, we “apply a
deferential abuse of discretion standard of review across the
board and consider any conflict of interest as one of several
factors in considering whether the administrator or the
fiduciary abused its discretion.” Id. Accordingly, even
though our cases prior to Glenn are no longer good law to the

12
Schwing v. The Lilly Health Plan, 562 F.3d 522, 525-26 (3d
Cir. 2009). Whereas “[t]he structural inquiry focuses on the
financial incentives created by the way the plan is organized,”
i.e., whether there is a conflict of interest, “the procedural
inquiry focuses on how the administrator treated the
particular claimant.” Post v. Hartford Ins. Co., 501 F.3d 154,
162 (3d Cir. 2007). Specifically, in considering the process
that the administrator used in denying benefits, we have
considered numerous “irregularities” to determine “whether,
in this claimant‟s case, the administrator has given the court
reason to doubt its fiduciary neutrality.” See id. at 165
(internal citations omitted). Ultimately, we “determine
lawfulness by taking account of several different, often case-
specific, factors, reaching a result by weighing all together.”
Glenn, 554 U.S. at 117.

III.

A. Termination of Benefits

Section 502(a)(1)(B) of ERISA allows a participant to
bring a claim to recover benefits due to him under the terms
of the plan. 29 U.S.C. § 1132(a)(1)(B).4 Miller asserts that

extent they applied the “sliding scale” approach, the various
factors that our Court has historically evaluated must still be
considered on arbitrary and capricious review. See id. at 526.
4
ERISA § 502(a)(1)(B) provides:
“A civil action may be brought –

13
American‟s termination of his LTD benefits was arbitrary and
capricious because (1) the decision was not based on
substantial evidence, (2) American operated under a structural
conflict of interest whereby it had the incentive to deny his
claim, and (3) American committed numerous procedural
errors during its review of his case. We address each
argument in turn.

1. Support for the Termination Decision

We determined in Schwing that where there was “an
abundance of evidence of [the claimant‟s] misconduct to
support the denial of [the] claim,” a structural conflict of
interest or procedural irregularities would not serve to “tip[]
the scales in favor of finding that the [administrator] abused
its discretion.” 562 F.3d at 526. American contends, at the
outset, that there was “overwhelming evidence of the absence
of a disability” that “plainly” supports the termination of
Miller‟s benefits, and that we should not consider whether
any procedural irregularities tainted their decision-making.
(American Br. at 19, 34.) In this regard, American relies
heavily on Dr. Gonzalez‟s description of Miller as being
“asymptomatic” to argue that there was substantial support

(1) by a participant or beneficiary –
…
(B) to recover benefits due to him under
the terms of the plan, to enforce his rights under
the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan[.]”

14
for their decision to terminate benefits and that any
irregularities should be disregarded. American essentially
argues that because Dr. Gonzalez labeled Miller as
asymptomatic, he had actually been erroneously awarded
benefits in the past and this had gone unnoticed. We
disagree.

The record demonstrates, contrary to American‟s
assertion that Miller simply slipped through the cracks, that
American exercised frequent oversight in Miller‟s case. In
fact, American reviewed and relied on documentation from
Dr. Gonzalez stating that Miller was asymptomatic and, on
multiple occasions over several years, found that this
description supported the payment of benefits. Notably, in
2003, American determined that Miller “[m]edically qualifies
for [the] disability pension program” and reinstated his LTD
benefits after receiving records describing him as
asymptomatic. (App. at 148.) Yet, after receiving additional
reports containing this same description, American terminated
Miller‟s benefits. As such, American interpreted Dr.
Gonzalez‟s characterization of Miller as asymptomatic to
mean that he was both eligible for disability benefits and that
his benefits should be terminated. American‟s reliance on the
term “asymptomatic” as the linchpin of Miller‟s ineligibility
for disability benefits is, therefore, misplaced.

Further, the record reveals that although Dr. Gonzalez
reported that Miller was no longer taking medication, he
consistently stated that Miller was still under his care.
Indeed, American noted twice after receiving records from

15
Dr. Gonzalez that Miller was unable to return to work as a
pilot. (Id. at 105-06.) In addition, American‟s internal
records repeatedly state that Miller was diagnosed with
anxiety and brief reactive psychosis. (Id. at 104-06.)
Notably, only a few days before American terminated
Miller‟s benefits, American‟s records state that Miller‟s
diagnosis was the “same.” (Id. at 107.) Finally, Dr.
Gonzalez‟s letter in support of Miller‟s appeal to the PBAC
notes that his psychiatric conditions are permanent and that
continued treatment is necessary to stabilize his health.

A review of the administrative record, therefore,
demonstrates that although Miller may not have been
outwardly manifesting symptoms, his psychiatric diagnoses
remained constant and required regular treatment. As such,
Dr. Gonzalez‟s report that Miller suffered from anxiety
diagnosis and brief reactive psychosis constituted “an illness
or injury verified through a qualified medical authority,” thus
satisfying the definition of disability under the Plan. (Id. at
717.) Unlike Schwing, the administrative record does not
contain “an abundance of evidence” of ineligibility such that
we should ignore any procedural defects in the termination
decision. 562 F.3d at 526. Because we disagree with
American‟s assertion that Dr. Gonzalez‟s description of
Miller as being “asymptomatic” forecloses our inquiry into
whether the termination of benefits was arbitrary and
capricious, we consider each factor in turn.

16
2. Structural Conflict of Interest

In a situation where “a benefit plan gives discretion to
an administrator or fiduciary who is operating under a conflict
of interest, that conflict must be weighed as a „facto[r] in
determining whether there is an abuse of discretion.‟”
Firestone, 489 U.S. at 115 (internal citation omitted). In
Glenn, the Supreme Court held that a conflict emerges
“where it is the employer that both funds the plan and
evaluates the claims” because “[i]n such a circumstance,
„every dollar provided in benefits is a dollar spent by . . . the
employer; and every dollar saved . . . is a dollar in [the
employer‟s] pocket.‟” 554 U.S. at 112. (internal citation
omitted).

Prior to Glenn, we consistently held that there is no
conflict of interest when an employer operates an actuarially
grounded plan whereby claims are paid through a trust. See,
e.g., Post, 501 F.3d at 164 n.6; Skretvedt v. E.I. DuPont de
Nemours and Co., 268 F.3d 167, 174 (3d Cir. 2001); Pinto v.
Reliance Standard Life Ins. Co., 214 F.3d 377, 388 (3d Cir.
2000); Mitchell v. Eastman Kodak Co., 113 F.3d 433, 437 n.4
(3d Cir. 1997); Abnathya, 2 F.3d at 45 n.5. In that type of
arrangement, the employer makes fixed contributions based
on an actuarial formula that estimates the plan‟s projected
benefit obligation. See Pinto, 214 F.3d at 388. Therefore, we
previously determined that no conflict existed because the
employer did not incur a direct expense in allowing benefits,
nor did it gain a direct benefit in denying claims. See id.

17
 In light of Glenn, however, we conclude that this
approach is no longer valid. Glenn instructs that a conflict
arises where an employer both funds and evaluates claims.
See 554 U.S. at 112. The Supreme Court‟s broad view of
whether a conflict of interest exists, therefore, encompasses
an arrangement where an employer makes fixed contributions
to a plan, evaluates claims, and pays claims through a trust.
Even in an actuarially grounded plan, the employer provides
the monetary contribution and any money saved reduces the
employer‟s projected benefit obligation. See id. The
Supreme Court did recognize, however, that a conflict
“should prove less important (perhaps to the vanishing point)
where the administrator has taken active steps to reduce
potential bias and to promote accuracy, for example, by
walling off claims administrators from those interested in
firm finances.” Id. at 117.

Turning to the case at hand, the Plan is a defined
benefit plan that American funds based on an actuarial
formula. The record reveals that although American did meet
ERISA‟s minimum funding requirements in 2006, the year
Miller‟s benefits were terminated, the Plan still lacked funds
to meet a significant amount of its projected benefit
obligation. Despite the fact that American made fixed
contributions to the Plan, every dollar that American saved by
reducing disability payments decreased its projected benefit
obligation. American argues that WME‟s involvement in the
review process insulated American from any conflict of
interest because the WME report was binding on all parties.
We do not believe that the WME review totally eliminated

18
any conflict of interest. First, it is undisputed that American
terminated Miller‟s benefits well before WME became
involved at the appeal stage. Second, Charlotte Teklitz, the
PBAC representative, testified in her deposition that
American could seek further review of the WME report‟s
conclusions if it was dissatisfied with its analysis. (App. at
549.) Though the WME review of Miller‟s claims may have
ameliorated some of the effects of the conflict of interest, the
fact remains that American did have some incentive to
terminate Miller‟s benefits. And, even though this conflict is
rather indirect, we must afford it some weight in light of
Glenn. See 554 U.S. at 112. Therefore, American‟s
structural conflict of interest weighs slightly in Miller‟s favor.

3. Procedural Factors

a. Reversal of Position

An administrator‟s reversal of its decision to award a
claimant benefits without receiving any new medical
information to support this change in position is an
irregularity that counsels towards finding an abuse of
discretion. See, e.g., Post, 501 F.3d at 164-65; Pinto v.
Reliance Standard Life Ins. Co., 214 F.3d 377, 393 (3d Cir.
2000). Miller claims that American abruptly terminated his
benefits in 2006 upon evaluating the same information that it
had previously found to support an award of benefits. The
District Court found that our decision in Foley v.
International Brotherhood of Electrical Workers Local Union
98 Pension Fund, 271 F.3d 551 (3d Cir. 2001), dictates that

19
American should not be prevented from terminating Miller‟s
benefits, despite the fact that it previously awarded them. See
Miller, 2010 WL 890016, at *8. In any event, the District
Court further concluded, American did not unjustifiably
reverse its position as to Miller‟s eligibility because American
received reports from Dr. Gonzalez that Miller was
asymptomatic in 2005 and 2006 to support the conclusion that
he was no longer disabled. See id.

Our review of the decision in Foley leads us to
conclude that it is not controlling in this situation. In Foley,
the claimant argued that it was arbitrary and capricious for the
employer to refuse to apply an exception for calculating
credited service when it had previously interpreted the
pension plan to allow the exception for other employees. See
271 F.3d at 554. We rejected that argument, reasoning that it
would be improper to effectively foreclose an employer from
correcting a previous erroneous interpretation of a plan. See
id. at 558-59. Thus, Foley deals with an employer‟s reversal
of a previous interpretation of a plan‟s language. It does not
address the significance of an employer‟s inconsistent
treatment of medical evidence used to determine whether a
claimant is disabled. In fact, we made clear in Post, decided
after Foley, that an employer‟s reversal of position as to
whether a claimant is disabled is a significant factor to be
weighed on arbitrary and capricious review. See Post, 501
F.3d at 164-65.

Turning to the District Court‟s alternative conclusion
that American did not reverse its position, we disagree that

20
the documentation from Dr. Gonzalez provided new
information regarding Miller‟s eligibility for benefits. The
records that American received from Dr. Gonzalez in 2005
and 2006 stating that Miller was asymptomatic do not differ
in any material aspect from the records submitted in 2003 that
American determined supported a disability finding. For
example, Dr. Gonzalez reported in 2003 that Miller was
diagnosed with anxiety and brief reactive psychosis, but that
he was currently asymptomatic. Later, in 2005, Dr. Gonzalez
stated that Miller was asymptomatic and was working toward
preventing manifestations of stress. Similarly, in 2006, Dr.
Gonzalez reported that Miller‟s diagnoses remained the same
and that he was asymptomatic. Each report mirrors the next
and identifies Miller as “asymptomatic.” Thus, the more
recent records were only “new” to the extent that they had not
been received before; they did not provide any new
information.

Moreover, American admitted that it could not
determine whether there was any change that occurred in
Miller‟s psychiatric condition between January 2003 and May
2007. As a result, the information that American relied upon
to terminate Miller‟s benefits in 2006 was the same type of
documentation that American interpreted to support a
disability finding in 1999 and again in 2003 through 2006.
We recognize that American‟s initial payment of Miller‟s
benefits does not operate as an estoppel such that they can
never terminate benefits. But, in the absence of any
meaningful evidence to support a change in position,
American‟s abrupt reversal is cause for concern that weighs

21
in favor of finding that its termination decision was arbitrary
and capricious. See id.; see also McOsker v. Paul Revere Life
Ins. Co., 279 F.3d 586, 589 (8th Cir. 2002) (reversal of
position supported arbitrary and capricious finding where
information used to terminate benefits did “not vary
significantly from the [previous] opinions”).

b. Reliance on Non-Existent Plan Requirements

We have previously held that an employer who
imposes requirements extrinsic to the plan in evaluating
eligibility for benefits acts arbitrarily and capriciously. See,
e.g., Mitchell v. Eastman Kodak Co., 113 F.3d 433, 443 (3d
Cir. 1997); Epright v. Envtl. Res. Mgmt., Inc. Health and
Welfare Plan, 81 F.3d 335, 342-43 (3d Cir. 1996). Miller
argues that American acted arbitrarily and capriciously by
relying in part on his failure to obtain his FAA medical
certification. The District Court found that the reference to
the FAA certification was “troubling” and “regrettable” when
the Plan did not impose this requirement. Miller, 2010 WL
890016, at *9. Nonetheless, the District Court concluded that
the termination decision could have been based on
American‟s inability to verify Miller‟s disability or Miller‟s
failure to obtain the recertification. See id. Because the letter
concluded by noting that “verification of [Miller‟s] continued
disability cannot be established,” the District Court reasoned
that the FAA medical certification language was “harmless
error.” Id. The District Court did not consider whether
American relied on Miller‟s failure to obtain his FAA
certification during the appeal stage.

22
 Based on the plain language in the termination letter,
as well as the other evidence in the record, we conclude that
American did rely, to some extent, on Miller‟s failure to
obtain his FAA medical certification. First, the letter states
that American was “unable to verify either the existence of a
continuing medical disability or [Miller‟s] continued
substantial progress towards obtaining [his] medical
certification.” (App. at 98.) Therefore, there were apparently
two potential bases for American‟s decision, one of which
was Miller‟s failure to seek his FAA medical recertification.
In addition, the letter instructs that Miller could receive
“further favorable consideration” if he demonstrated that he
was actively pursuing the certification. (Id.) It is unlikely
that American would include this instruction if Miller‟s
obtaining his FAA certification did not somehow bear on his
eligibility for benefits.

Second, American offered no evidence to establish,
contrary to the termination letter‟s focus, that it did not rely
on this requirement. Dr. Bettes, the author of the termination
letter, testified that he could not recall whether the decision to
terminate Miller‟s benefits was influenced by Miller‟s failure
to seek medical certification. (Id. at 1130.) In fact, Dr. Bettes
also testified that a pilot‟s failure to apply for FAA
certification could contribute to his decision to deny benefits.
(Id.)

Moreover, Drs. Crain and Seskind placed significant
weight on Miller‟s failure to obtain his medical certification
in the WME report. Notably, Dr. Crain remarked that “[t]he

23
records of Dr. Gonzalez do not document any psychiatric
problems or issues to explain his failure to obtain the medical
certificate, so that it cannot be attributed to a mental
disorder.” (Id. at 310.) Likewise, Dr. Seskind devoted a
significant portion of his report to a discussion of Miller‟s
failure to regain his FAA medical certification. His analysis
concluded by noting that because Miller had not been denied
this certification, he was not suffering from a mental illness
and therefore was not truly disabled. Because American
adopted the WME report and included it in the final letter
affirming the termination of Miller‟s benefits, it relied on this
requirement. Given that American did not offer any evidence
to contradict the plain language of the letter, the overreaching
emphasis on this requirement in the termination letter and
throughout the appeal process demonstrates that it was a
factor in the termination decision here. The Plan does not
compel a pilot to seek FAA medical certification in order to
be eligible for LTD benefits. Thus, American‟s imposition of
this requirement is a factor that counsels towards finding that
the termination decision was arbitrary and capricious. See
Mitchell, 113 F.3d at 443; Epright, 81 F.3d at 342-43.

c. Compliance with Section 503 of ERISA and
Accompanying Regulations

Section 503 of ERISA requires that every employee
benefit plan must:

“(1) provide adequate notice in writing to any
participant or beneficiary whose claims for

24
 benefits under the plan has been denied, setting
forth the specific reasons for such denial,
written in a manner calculated to be understood
by the participant, and

(2) afford a reasonable opportunity to any
participant whose claim for benefits has been
denied for a full and fair review by the
appropriate named fiduciary of the decision
denying the claim.”

29 U.S.C. § 1133. The accompanying regulations note that
“this section sets forth minimum requirements for employee
benefit plan procedures pertaining to claims for benefits by
participants and beneficiaries.” 29 C.F.R. § 2560.503-1(a).
The regulations require a plan administrator to provide
written notification of any adverse benefit determination
setting forth

[I]n a manner calculated to be understood by the
claimant . . . (i) [t]he specific reason or reasons
for the adverse determination; (ii) [r]eference to
the specific plan provisions on which the
determination is based; (iii) [a] description of
any additional material or information
necessary for the claimant to perfect the claim
and an explanation of why such material or
information is necessary[.]”

25
Id. § 2560.503-1(g)(1). The District Court determined that
§ 503 and the accompanying regulations were irrelevant to
Miller‟s claim, as it was brought pursuant to § 502. See
Miller, 2010 WL 890016, at *9. The District Court erred in
this regard. Although § 502 provides the private right of
action to bring a claim to recover benefits due, § 503 sets
forth the basic requirements governing ERISA plans. To that
end, a plan that does not satisfy the minimum procedural
requirements of § 503 and its regulations operates in violation
of ERISA. Therefore, an administrator‟s compliance with
§ 503 in making an adverse benefit determination is probative
of whether the decision to deny benefits was arbitrary and
capricious. See, e.g., Majeski v. Metro. Life Ins. Co., 590
F.3d 478, 484 (7th Cir. 2009); Hobson v. Metro. Life Ins. Co.,
574 F.3d 75, 87 (2d Cir. 2009); Grossmuller v. Int’l Union,
715 F.2d 853, 856-57 (3d Cir. 1983); Kao v. Aetna Life Ins.
Co., 647 F. Supp. 2d 397, 410 (D.N.J. 2009). Indeed, the
Department of Labor has noted that “the procedural
minimums of the regulation are essential to procedural
fairness.” Department of Labor Pension and Welfare Benefits
Administration, 65 Fed. Reg. 70246, 70255 (proposed
Nov. 21, 2000) (codified at 29 C.F.R. § 2560).

We briefly addressed whether a denial letter set forth
adequate “specific reasons” under § 503 and the
accompanying regulations in Grossmuller, 715 F.2d at 858.
There, we determined that the administrator‟s termination
letter did not comply with § 503 where it informed the
claimant that his benefits were terminated because he was
found to be otherwise gainfully employed, without providing

26
any factual basis to support the decision or stating upon what
evidence the administrator relied. See id. Conversely, in
Syed v. Hercules Inc., 214 F.3d 155 (3d Cir. 2000), we
concluded that the letter satisfied § 503 where it explained
that the claimant‟s benefits were terminated because the
results of the particular doctor‟s independent medical
evaluation demonstrated that he was no longer disabled. See
214 F.3d at 162-63. The administrator reached this
conclusion after analyzing the present physical diagnosis in
light of the definition of total disability under the plan. See
id.

Other decisions addressing this discrete issue are also
instructive. For example, the Seventh Circuit held in Halpin
v. W.W. Grainger, Inc., that the termination letter did not
satisfy § 503 when it stated that “no objective medical
evidence was contained in [the] claim to substantiate total
disability from any gainful occupation.” 962 F.2d 685, 692-
93 (7th Cir. 1992). The court instructed that the bare
conclusions in the letter, unsupported by any rationale, did
not set forth “specific reasons” as mandated by § 503. See id.
at 693. Similarly, in Vanderklok v. Provident Life and
Accident Insurance, 956 F.2d 610 (6th Cir. 1992), the Sixth
Circuit found that the denial letter did not comply with § 503.
There, the letter informed the claimant accordingly, “[w]e
regret that the claim does not qualify . . . because the proof
does not establish that the insured is totally and permanently
disabled.” 956 F.2d at 616. The court determined that the
letter‟s purported “reasons” were simply unsupported

27
conclusions that did not provide any specific information as
to the basis for the denial. See id.

By contrast, in Hobson v. Metropolitan Life Insurance
Co., 574 F.3d 75 (2d Cir. 2009), the Second Circuit reasoned
that the denial letter complied with § 503 because it described
the precise information that was lacking from the file, such as
whether claimant‟s depression was severe enough to result in
suicidal thoughts or hospitalization, whether the seizures were
ongoing, and whether the claimant exhibited the diagnostic
criteria for the relevant disease. Accordingly, the Second
Circuit found that the administrator‟s letter presented the
claimant with a specific rationale for the denial of benefits,
not simply a conclusory statement that she was ineligible.
See id. at 87.

We find the termination letter in this case to be legally
deficient under § 503 for two reasons. First, the letter does
not provide “specific reasons for [the] denial, written in a
manner calculated to be understood by the participant.” 29
U.S.C. § 1133. The letter states that American is “unable to
verify either the existence of a continuing medical disability
or [Miller‟s] continued substantial progress towards obtaining
[his] FAA medical certification.” (App. at 98.) American‟s
inability to “verify” Miller‟s disability is a bare conclusion
that does not provide a specific reason for the termination
decision. Rather, this purported explanation is a general
blanket assessment that Miller is ineligible for disability
benefits. The letter makes no mention of Miller‟s specific
diagnoses nor the precise information that is lacking from his

28
file. Moreover, the letter provides no insight into why the
records that American received, and based on which
American previously awarded and reinstated benefits, would
no longer support a disability finding. American was on
notice that this letter was not “written in a manner calculated
to be understood by the participant” because Miller
subsequently inquired as to the specific reasons for the
termination, but was simply referred back to the letter itself.
The letter‟s mention of FAA certification is the most specific
reason given for the termination, but this reference is
misleading because it was not a prerequisite under the Plan
and therefore not a valid reason to deny Miller‟s LTD
benefits. The language in the letter is more akin to the
conclusory statements in Grossmuller, Halpin, and
Vanderklok, where the plan administrator summarily
concluded that the claimant was ineligible, or that the
evidence received did not support the claim without providing
further factual support. See Halpin, 962 F.2d at 692-93;
Vanderklock, 956 F.2d at 616; Grossmuller, 715 F.3d at 858.
And, unlike the letter in Hobson that set forth the precise
information lacking from the file or the decision in Syed that
analyzed the physical diagnosis in light of the definition of
total disability, the letter here did neither. See Hobson, 574
F.3d at 87; Syed, 214 F.3d at 162-63. Thus, we believe that
the language of the termination letter is conclusory and does
not provide the “specific reasons” as to why Miller was no
longer eligible for benefits, falling short of the requirements
under § 503.

29
 Second, we conclude that the termination letter does
not provide the precise information necessary to advise Miller
how to perfect his claim. The regulations accompanying
§ 503 require the termination letter to describe “any
additional material or information necessary for the claimant
to perfect the claim and an explanation of why such material
or information is necessary.” 29 C.F.R. § 2560.503-
1(g)(1)(iii). Here, the letter informed Miller that “[i]n order
to receive further favorable consideration, you will need to
demonstrate that you are actively pursuing obtaining your
FAA medical certification.” (App. at 98.) Obtaining this
certification, however, is not a requirement under the Plan
and would therefore not serve to change his disability status.
Given that the letter did not set forth any additional
instruction as to how Miller could achieve a favorable
disability determination, it does not comply with 29 C.F.R.
§ 2560.503-1(g)(1)(iii). The termination letter here does not
satisfy the basic procedural mandates of ERISA, as set forth
in § 503 and the relevant regulations. Instead of ensuring the
procedural fairness of the termination decision, this letter
made it exceedingly difficult for Miller to understand, let
alone challenge, the bases for American‟s course of action.
For that reason, American‟s noncompliance with the statute
weighs in favor of finding that their decision was arbitrary
and capricious.

d. Analysis of All Relevant Diagnoses

An administrator‟s failure to address all relevant
diagnoses in terminating a claimant‟s benefits is also a cause

30
for concern that suggests the decision may have been
arbitrary and capricious. See Kosiba v. Merck & Co., 384
F.3d 58, 68-69 (3d Cir. 2004). In Kosiba, we instructed the
district court to consider on remand whether the administrator
properly evaluated the claimant‟s medical conditions. See id.
In doing so, we emphasized that an administrator‟s failure to
take into account multiple documented diagnoses suggests
that a denial of benefits was not the product of reasoned
decision-making. See id. Similarly, in Kalish v. Liberty
Mutual/Liberty Life Assurance Co. of Boston, 419 F.3d 501
(6th Cir. 2005), the Sixth Circuit held that the administrator‟s
reliance on an outside physician‟s report that made only a
passing reference to the claimant‟s diagnosis of depression,
without further analysis, called into question the
reasonableness of the decision. The court noted it was
significant that the claimant had two distinct diagnoses,
depression and a heart condition, but the administrator failed
to adequately consider whether the depression alone would
impact the claimant‟s ability to return to work. See id. at 510.

American argues, and the District Court agreed, that it
adequately considered Miller‟s anxiety diagnosis because Dr.
Crain concluded, “Miller does not have overt evidence of a
treatable medical condition.” (App. at 310.) Miller counters
that American did not properly examine his anxiety diagnosis
because neither the termination letter nor the WME report
sufficiently analyzed this condition. We note at the outset that
the termination letter does not mention either of Miller‟s
diagnoses – anxiety disorder or brief reactive psychosis.
Therefore, we look to whether the WME report addressed

31
Miller‟s claimed diagnoses. Our review of the WME report
itself leads us to the conclusion that, contrary to American‟s
broad interpretation of the evaluators‟ analysis, it did not
adequately scrutinize Miller‟s anxiety diagnosis. In ordering
the report, American specifically directed WME to evaluate
Miller‟s claims that he suffered from these two conditions.
Additionally, the 2006 letter from Dr. Gonzalez, mentioned in
the WME report, states that Miller suffered from anxiety.

Despite the prompting by American, neither Dr. Crain
nor Dr. Seskind devoted any of their discussion to Miller‟s
anxiety diagnosis. Dr. Seskind made no reference to anxiety
in his portion of the report, but rather began his analysis by
noting that it was essential that Miller not suffer from
psychosis. He went on to discuss the symptoms of psychosis,
the fact that Miller was not taking any medication, and that he
had not obtained his FAA medical certification. Dr. Seskind
concluded by noting that “[s]ince this is now getting into the
distant past of at least six years,” Miller was no longer
disabled because he was not undergoing formal psychiatric
treatment. (Id. at 312.) In this regard, Dr. Seskind‟s report
focuses exclusively on Miller‟s psychotic episode; there is no
discussion whatsoever of Miller‟s claim that he continued to
suffer from anxiety or Dr. Gonzalez‟s 2006 letter stating the
same.

Dr. Crain‟s portion of the report is likewise deficient in
its analysis of Miller‟s anxiety diagnosis. Although Dr. Crain
does mention Miller‟s anxiety, he makes this reference in the
context of describing the various medical records from Dr.

32
Gonzalez. Interestingly, Dr. Crain acknowledged Dr.
Gonzalez‟s report that “[n]o medical treatment could revert,
undue or cure [Miller‟s] underlying condition.” (Id. at 310.)
Yet, Dr. Crain ultimately observed that the “psychiatric
records show no objective evidence of continuing disability,”
without providing insight into why the anxiety diagnosis was
no longer supported. (Id.) He further noted that “[a]lthough I
do not have all of the facts concerning the emotional stresses
that led to the onset of Mr. Miller‟s psychosis, I assume that
now, after nine years, these issues have been dealt with
through psychotherapy.” (Id. at 311.) This conclusion
seemingly focuses on Miller‟s initial diagnosis of psychosis.
The remainder of Dr. Crain‟s report discusses the risk that
Miller may have another psychotic episode.

Notwithstanding the fact that Drs. Crain and Seskind
had received records chronicling Miller‟s anxiety and were
directed by American to evaluate this diagnosis, the WME
report did not present any analysis of this condition or explain
why it no longer rendered Miller disabled. Whereas the
report does address Miller‟s psychosis, it fails to devote any
meaningful discussion to Miller‟s claim that he suffered from
continuing anxiety. A mere reference that Miller has been
diagnosed with anxiety, without providing any explanation of
why that diagnosis is no longer supported, casts doubt on the
reasonableness of American‟s decision-making. See Kalish,
419 F.3d at 510. American did not request further
clarification from WME and accepted the report as provided
in ultimately terminating Miller‟s LTD benefits. Although
we recognize that American is not required to credit Dr.

33
Gonzalez‟s reports over Drs. Crain and Seskind simply
because he was Miller‟s treating physician, see Black &
Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003), we
are skeptical of American‟s exclusive reliance on the
conclusions in the WME report to determine that Miller was
not disabled when the report neglects to substantively analyze
Miller‟s anxiety diagnosis. Therefore, given that American
did not mention the anxiety diagnosis in its termination letter
and the WME report was incomplete in its analysis, American
cannot be said to have fully considered all of Miller‟s
diagnoses. This omission counsels towards finding that
American‟s decision was arbitrary and capricious. See
Kosiba, 384 F.3d at 68-69.

e. Job Requirements

Although we have not previously so held, various
courts have determined that an administrator‟s proper
consideration of the claimant‟s ability to perform his or her
job requirements in light of the relevant diagnosis is a
significant factor to evaluate on arbitrary and capricious
review. See, e.g., Elliott v. Metro. Life Ins. Co., 473 F.3d
613, 619 (6th Cir. 2006) (determining that plan
administrator‟s decision could not be considered “reasoned”
when there was no discussion of claimant‟s duties or her
ability to complete them in light of diagnoses); Kalish, 419
F.3d at 507 (finding that administrator‟s conclusion that
claimant “might be capable of sedentary work cannot be a
rational basis for finding that he was not disabled, given that
his former occupation required him to walk, stand, and reach

34
for several hours a day”); Lamanna v. Special Agents Mut.
Benefits Ass’n, 546 F. Supp. 2d 261, 296-97 (W.D. Pa. 2008).
In Elliott, the Sixth Circuit expressed skepticism of the
insurance company‟s conclusion that the claimant was not
disabled when it did not consider the specific requirements of
her position. See 473 F.3d at 619. The court observed that
the administrator‟s denial letter simply recited the diagnoses
of the claimant‟s condition, but did not provide any
explanation of how the claimant could be expected to perform
the functions of her job in light of these ailments. See id.
Therefore, the court determined, the administrator “cannot be
said to have given a reasoned denial of [the] claim.” Id.
(emphasis in original).

We find this analysis persuasive because it is essential
that any rational decision to terminate disability benefits
under an own-occupation plan consider whether the claimant
can actually perform the specific job requirements of a
position. The District Court did not consider whether
American adequately addressed Miller‟s ability to fulfill his
job requirements. Miller contends that neither the termination
letter nor the WME report provided any explanation of how
he could perform the essential duties of his position as a pilot.
American did not address Miller‟s ability to function as a
pilot in the termination letter; however, the WME report
canvasses the extent to which it considered the actual job
requirements Miller had to fulfill. American included a job
description and a list of essential functions that a pilot must
perform when it ordered the WME report. Therefore, we

35
consider whether the WME report adequately addressed
Miller‟s ability to function as a pilot.

Even though the WME evaluators determined that
Miller was not disabled, they arrived at this conclusion
without considering whether he could actually perform his
duties as a pilot in light of his diagnoses. According to
American‟s job description, a pilot must, among other things,
“be able to work varying hours of the day or night,” possess
“[c]apability of decision-making under stress,” as well as
“[t]he ability to adapt to diversified flight schedules,
situations, or scenarios.” (App. at 303-05.) In addition,
because the Plan provides “own occupation” disability
benefits, it is essential to consider whether a pilot is capable
of working in that capacity, regardless of his ability to
function in a different position. Although Dr. Crain
concluded that Miller was “not disabled from his occupation
as a Pilot,” he also recognized that Miller was at risk of
having another psychotic episode if he was exposed to
physical fatigue, sleep deprivation, and emotional stress. (Id.
at 311.) As such, there is a striking incongruity between Dr.
Crain‟s conclusion that Miller could return to work as a pilot
– having to operate under considerable stress – and his
recognition that stress, fatigue, and sleep deprivation could
prompt another psychotic episode. Moreover, Dr. Crain did
not address how the fact that Dr. Gonzalez had diagnosed
Miller with anxiety would be compatible with his ability to
work under stress as a pilot.

36
 On the whole, we believe that Dr. Crain‟s conclusion
that Miller could perform as a pilot, without explaining how
his claimed anxiety and latent risk of psychosis would be
compatible with this uniquely stressful position, is
perfunctory. Accordingly, American‟s failure to address the
specific demands that Miller would face as a pilot suggests
that the termination decision was not reasoned and based on
an individualized assessment of Miller‟s ability. Thus, this is
a significant oversight that suggests the decision was arbitrary
and capricious. See Elliott, 473 F.3d at 619; Kalish, 419 F.3d
at 507.

4. Weighing of the Factors

To decide whether an administrator‟s termination of
benefits is arbitrary and capricious, we “determine lawfulness
by taking account of several different, often case-specific,
factors, reaching a result by weighing all together.” Glenn,
554 U.S. at 117. Here, we give significant weight to our
conclusions that American reversed its initial position that
Miller was disabled and terminated his benefits without
receiving supporting information that differed in any material
way from the information upon which it previously relied,
and that American considered Miller‟s failure to obtain his
FAA medical certification when it was not required under the
Plan.5 We find equally troubling American‟s noncompliance

5
Though the imposition of an extra-Plan requirement
is far from the only irregularity presented in this case, we note
that this fact alone likely would have supported a holding that

37
with ERISA‟s notice requirements under § 503, as well as
American‟s failure to fully evaluate Miller‟s anxiety
diagnosis and to reconcile the demanding job requirements of
a commercial pilot with Miller‟s continuing anxiety and risk
that he would experience a recurring psychotic episode.
Finally, we afford slight weight to the fact that American
operated under a conflict of interest in light of its incentive to
deny benefits claims. Viewing these factors as a whole, we
believe that American‟s decision to terminate Miller‟s LTD
benefits was not the product of reasoned decision-making and
substantial evidence. See Abnathya, 2 F.3d at 45. Rather,
there were numerous procedural irregularities and substantive
errors on American‟s part, giving us “reason to doubt its
fiduciary neutrality.” Post, 501 F.3d at 165. Thus, we
conclude that American‟s termination of Miller‟s benefits was
arbitrary and capricious. See Glenn, 554 U.S. at 117.

B. Remedy

Having determined that American abused its
discretion, we consider the appropriate remedy. We have not
squarely addressed the issue of the appropriate remedy for an
improper termination of benefits under § 502(a)(1)(B).
American argues that if we find the termination decision to be
arbitrary and capricious, we must remand the case to the Plan
administrator pursuant to our decision in Syed, 214 F.3d at
162. There, we determined that a remedy for a violation of

American‟s decision to terminate Miller‟s LTD benefits was
arbitrary and capricious.

38
ERISA § 503 is a remand to the plan administrator so as to
provide the claimant with the benefit of a full and fair review
of the claim. See id. We are not persuaded. Miller‟s claim is
based on § 502 for an improper termination of his LTD
benefits. As previously discussed, whether the notice
requirements of § 503 are met is relevant to this action only
insofar as American‟s noncompliance with the statute factors
into arbitrary and capricious review. Syed is readily
distinguishable and not controlling on this issue.

Other courts addressing this question have determined
that retroactive reinstatement of a claimant‟s benefits is the
proper remedy when the administrator‟s termination decision
was unreasonable. See, e.g., Pannebecker v. Liberty Life
Assur. Co. of Boston, 542 F.3d 1213, 1221 (9th Cir. 2008);
Schneider v. Sentry Group Long Term Disability Plan, 422
F.3d 621, 629 (7th Cir. 2005); Hackett v. Xerox Corp. Long-
Term Disability Income Plan, 315 F.3d 771, 776 (7th Cir.
2003); Sanford v. Harvard Indus., Inc., 262 F.3d 590, 599
(6th Cir. 2001); Halpin, 962 F.2d at 697; Harrison v.
Prudential Ins. Co. of Am., 543 F. Supp. 2d 411, 424 (E.D.
Pa. 2008). In deciding whether to remand to the plan
administrator or reinstate benefits, we note that it is important
to consider the status quo prior to the unlawful denial or
termination. See Hackett, 315 F.3d at 776. As such, an
important distinction emerges between an initial denial of
benefits and a termination of benefits after they were already
awarded. In a situation where benefits are improperly denied
at the outset, it is appropriate to remand to the administrator
for full consideration of whether the claimant is disabled. To

39
restore the status quo, the claimant would be entitled to have
the plan administrator reevaluate the case using reasonable
discretion. In the termination context, however, a finding that
a decision was arbitrary and capricious means that the
administrator terminated the claimant‟s benefits unlawfully.
Accordingly, benefits should be reinstated to restore the status
quo.

In this case, American abused its discretion in
terminating Miller‟s LTD benefits. Therefore, retroactive
reinstatement of his benefits is necessary.

IV.

We conclude that American acted arbitrarily and
capriciously in terminating Miller‟s LTD benefits. The
decision-making process that American applied was flawed in
many aspects, demonstrating that the assessment of Miller‟s
disability was not the product of a reasoned, disinterested
fiduciary. Given that multiple factors counsel in Miller‟s
favor and that his benefits were unlawfully terminated, we
find that retroactive reinstatement of his benefits is the
appropriate remedy. Therefore, we reverse and remand to the
District Court for entry of summary judgment in favor of
Miller. Additionally, we direct the District Court to order
American to retroactively reinstate Miller‟s LTD benefits,
effective from the date of termination.

40
WEIS, Circuit Judge.

It is doubtful that the Administrator acted in an
arbitrary and capricious manner in accepting the clinical
findings of American‟s medical evaluators rather than those
of Miller‟s physician. As we have held, “[u]nder the arbitrary
and capricious standard, the court must defer to the
administrator of an employee benefit plan unless the
administrator‟s decision is clearly not supported by the
evidence in the record or the administrator has failed to
comply with the procedures required by the plan.” Abnathya
v. Hoffman-La Roche, Inc., 2 F.3d 40, 41 (3d Cir. 1993)
(reversing grant of summary judgment in favor of plaintiff
and directing entry of judgment in favor of defendant).

Further, the court must be vigilant not to
“substitute its own judgment for that of the [administrator] in
determining eligibility for plan benefits” and may overturn a
plan administrator‟s decision only if it is “without reason,
unsupported by substantial evidence or erroneous as a matter
of law.” Id. at 45 (quotations omitted).

The Administrator‟s adoption of the opinions of
American‟s medical evaluation team, rather than that of
Miller‟s physician, is a choice that is not unusual in cases like

41
this and is one usually entrusted to the Administrator.6 See
Stratton v. E.I. DuPont De Nemours & Co., 363 F.3d 250,
258 (3d Cir. 2004) (courts may not “impose on plan
administrators a discrete burden of explanation when they
credit reliable evidence that conflicts with a treating
physician‟s evaluation” (quoting Black & Decker Disability
Plan v. Nord, 538 U.S. 822, 834 (2003))); see also Boiling v.
Eli Lilly & Co., 990 F.2d 1028, 1029-30 (8th Cir. 1993) (“The

6
This deferential standard in the face of a clear, if not
uncommon, conflict of interest is not without criticism.
Indeed, we have observed that it may “simply invite[ ]
drafters of employee benefit plans to insert boilerplate
language in plan documents to ensure that courts will apply a
deferential standard of review over the decisions of the plan
administrator.” Abnathya, 2 F.3d at 45 n.5 (discussing John
H. Langbein, The Supreme Court Flunks Trusts, 1990 Sup.
Ct. Rev. 207, 220-23); see also Paul J. Schneider & Brian M.
Pinheira, ERISA: A Comprehensive Guide 8-15 (3d ed. 2008)
(“Most employee benefit plans contain (or can easily be
amended to provide) appropriate boiler-plate language giving
plan administrators discretion to interpret the plan”).
Although we have questioned this degree of deference,
neither Congress nor the Supreme Court has addressed the
issue further, see Abnathya, 2 F.3d at 45 n.5 (expressing
desire for additional guidance from the Court or an
amendment to the ERISA statute), and it is, therefore, a
standard that we are obliged to uphold.

42
Committee did not abuse its discretion merely because there
was evidence before it that would have supported an opposite
decision”).

In addition, neither the asserted procedural
missteps cited by Miller nor the alleged conflict of interest
actually prejudiced his administrative appeal. These factors
were at most de minimus and did not hinder full consideration
of the relevant issues. A much more objective test for
evaluating whether the termination of benefits was arbitrary
and capricious lies in the Administrator‟s failure to address
Miller‟s claim that, because of his illness, he could not return
to work as a pilot for American.

The Plan at issue in this case provides long term
benefits to any “pilot who is prevented from acting as a
cockpit crewmember in the service of [American Airlines]
due to a [d]isability.” Disability, in turn, is defined as “an
illness . . . verified through a qualified medical authority that
prevents a pilot from continuing to work as a pilot for
[American Airlines].”

An individual who does not have a medical
certificate issued by the FAA may not be employed as a pilot
for American Airlines. Miller did not have a certificate in the
year 2006, when his benefits were terminated. Moreover,

43
federal regulations state that, in order to be eligible for such a
certificate, one must, among other things, have “[n]o
established medical history or clinical diagnosis of . . . [a]
psychosis.” 14 C.F.R. § 67.107(a)(2).7 The Plan does not
require Miller to apply for a medical certificate after the onset
of his disability, nor did it authorize American to apply for
certification on his behalf. However, the requirement of FAA
medical certification is inherent in the Plan‟s definition of
disability. By failing to address this issue, the Plan
Administrator deprived Miller of a full and fair hearing and
thus committed an abuse of discretion. See, e.g., Grossmuller
v. Int‟l Union, United Auto., Aerospace & Agric. Implement

7
“As used in this section, „psychosis‟ refers to a mental
disorder in which:
(i) The individual has manifested delusions, hallucinations,
grossly bizarre
or disorganized behavior, or other commonly accepted
symptoms of this
condition; or (ii) The individual may reasonably be expected
to manifest
[those symptoms].” 14 C.F.R. § 67.107(a)(2). A
waiver of these requirements may be granted only if the
applicant shows to the satisfaction of the Federal Air Surgeon
that the duties applied for “can be performed without
endangering public safety.” 14 C.F.R. § 67.401(a).

44
Workers of Am., 715 F.2d 853, 857 (3d Cir. 1983) (“To
afford a plan participant whose claim has been denied a
reasonable opportunity for full and fair review, the plan‟s
fiduciary must consider any and all pertinent information
reasonably available to him”).

Miller‟s lack of FAA medical certification has been an
issue from the outset of this case. In its October 23, 2006,
letter advising him that his disability benefits would be
terminated, American stated, “we are unable to verify either
the existence of a continuing medical disability or your
continued substantial progress towards obtaining your FAA
medical certification.” In addition, Miller was advised that,
“[i]n order to receive further favorable consideration, you will
need to demonstrate that you are actively pursuing obtaining
your FAA medical certification.”

In his application for the administrative appeal
of the termination decision, Miller cited his inability to obtain
a medical certificate from the FAA. He explained that he was
“unable to return to active flight status due to a medical
history of psychosis and a general anxiety disorder.” When
asked for the basis of his appeal, he wrote, “still sick, under
continuing psychiatric care, and unable to obtain an airman
medical certificate due to psychosis and a general anxiety
disorder.”

45
 The medical opinions of Dr. Gonzalez as well
as those of Drs. Crain and Seskind underscore the
interdependence between the Plan‟s definition of “disability”
and the requirement of FAA medical certification. As Dr.
Gonzales reported in a letter dated November 22, 2006, “Mr.
Miller has been continually and [will] be permanently
disabled from obtaining a Class One Medical Certificate as
required by F.A.A. regulations since August of 1998.”
Further, he had “not regained his Class One Medical
Certificate as the exclusive and direct consequence of the
permanent status of his mental illness.”8

As a member of the Plan‟s medical evaluation
team, Dr. Seskind, himself a Senior Aviation Medical
Examiner, noted,

8
This was not the first time that Dr. Gonzalez
referred to the requirement of FAA medical certification. In a
June 10, 2003, letter to American Airlines, he wrote that “Mr.
Miller has been asymptomatic and able to safely return to his
usual work since the spring of 2001. I anticipate Mr. Miller
will return to his regular work upon reinstatement of his FAA
medical certificate . . . . Once released by the chief FAA
psychiatrist, Mr. Robert Miller‟s working hours should
strictly abide by the FAA regulations on maximum hours to
be worked without periods of rest in between (FAA [Part 12]
requirements).”

46
 “From an AME [f]ederal
[a]viation [s]tandpoint, I quote
[14 C.F.R.] Section 67.107, for
first class airman medical
certificate[. T]he medical
standards are that there be no
psychosis, which means that the
individual has manifested
delusions, hallucinations, grossly
bizarre or disorganized behavior
or other commonly accepted
symptoms of his condition or the
individual may reasonably be
expected to manifest [such
symptoms].”

He concluded, “[m]y medical opinion is that while a senior
AME would not be able to issue a medical certificate in such
a case on his own, . . . the FAA might well favorably regard
this gentleman as capable of flying under proper supervision.
. . . [T]here is no real evidence that he is disabled and
incapable of performing his flight duties.”

Thus, although the Plan‟s medical experts (and,
arguably, Miller‟s own physician) opined that he was
physically capable of returning to work as a pilot, the fact

47
remains that Miller is now and will remain unable to resume
those duties unless the FAA reissues his medical certificate.

The Administrator‟s lack of attention to this
issue may have been explained in the deposition of Charlotte
Teklitz, American‟s Managing Director of Benefits and
Productivity, who was delegated by American‟s Pension
Benefits Appeals Committee to resolve appeals from
disability benefit terminations. She testified that “[t]he plan
has no requirement . . . for the pilot to continue to try to get
[his] FAA [certification]” and later explained, “[y]ou have to
be disabled from the occupation of pilot, and the FAA
certification is not specifically relevant.” Therefore, she
denied the plaintiff‟s appeal because of “the third party
medical review[,] which indicates from both of these doctors
that he is no longer disabled from the occupation of pilot.”

Potentially inconsistent with that testimony,
however, are American‟s Pilot Disability Case Management
Notes for Miller. These indicate that, in 2003 (after
American had terminated the plaintiff‟s disability benefits the
first time), the fact that FAA regulations precluded plaintiff
from returning to work within five years of stopping certain
medications may have been a factor in determining that his
disability benefits should be reinstated.

48
 One note, for example, mentioned that Miller
“[c]an not RTW [return to work] for 5 yrs after stopping
meds. . . . [M]eds discontinued Jan. 02- PCD of Jan 07”).
Those same notes indicate that, in November 2005, American
hoped to “obtain authoriz[ation] to submit [his medical
information] to [the] FAA” on a “hunch . . . that he might be a
candidate” for medical clearance notwithstanding his history
of psychosis “after a 10 yr stable observation period.”

To reiterate, under American‟s Plan, a pilot may
receive long-term disability benefits if he is prevented from
acting as a crew member in service to the company because
of an illness or injury. Miller meets that definition. He is
prevented from returning to employment as a pilot because
his medical history (and the basis for his nearly decade-long
receipt of disability benefits) precludes him from obtaining
the necessary licensure. In other words, he has an illness that
seemingly would prevent the FAA from certifying him; as a
result, he contends he is unable to function as a pilot for
American and therefore is entitled to benefits.

Whether Miller was “prevented” from returning as a
“cockpit crew member” due to a “disability” or history of a
disability that prevents his service was a contention raised by
him but not decided by the Pension Benefit Appeals
Committee. The Committee‟s failure to address that claim

49
deprived Miller of a full and fair review, see 29 U.S.C. §
1133(2), and, therefore, amounted to an abuse of discretion.

To clarify, I need not (and do not) decide that Miller‟s
lack of FAA certification per se entitles him to benefits. It is
enough that the Administrator declined to rule on a serious
and substantial issue.

Remand is not necessary because there is no dispute
over the relevant facts and the legal issues were apparent to
the parties. Accordingly, I join in reversing the judgment of
the District Court.

50